NOTE TO READERS:
The next issue of "RFE/RL Security and Terrorism Watch" will appear on 6 August.

FOREIGN POLICY

PUTIN SPECULATES ABOUT RUSSIA'S SOUTHERN BORDER.
Speaking at a Saransk meeting of Volga Federal District officials on 8 July (see "RFE/RL Newsline," 9 July 2002), President Vladimir Putin said that he believes Russia should reconsider where its southern border with Kazakhstan should lie, polit.ru and regions.ru reported the same day. Putin said that it would be a mistake to build border facilities along the current border with the former Soviet republic if the countries intend to create a common economic space. He revealed that he discussed the issue at an informal meeting with the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan on 6 July in Aqtau, Kazakhstan (see "RFE/RL Newsline," 8 July 2002). Kazakhstan, Kyrgyzstan, Tajikistan, Russia, and Belarus form the Eurasian Economic Commonwealth (EES). Putin said that a common border will help commonwealth countries cope with threats such as drug trafficking, especially from Afghanistan.

RUSSIA MAY NOT RATIFY CONVENTIONAL-ARMS TREATY.
The Russian delegation to the Joint Consultative Group of the Treaty on Conventional Armed Forces in Europe, headed by Russian State Duma Foreign Affairs Committee Chairman Dmitrii Rogozin and Defense Committee Chairman Andrei Nikolaev, announced that Russia will not ratify the treaty unless the Baltic states do so as well, gzt.ru reported on 5 July. Nikolaev said that the treaty was signed between NATO and the Soviet Union 12 years ago and that the Russian obligation not to deploy large forces in Kaliningrad and Pskov oblasts was based "on a concrete military-political situation." Rogozin said that Russia will demand changes to the treaty if "even one Baltic state joins NATO."

RUSSIA AND FRANCE CREATE JOINT SECURITY COUNCIL...
Foreign Minister Igor Ivanov announced on 8 July after talks in Moscow with his French counterpart Dominique de Villepin the creation of a joint security council that will deal with issues of strategic stability, Russian and Western news agencies reported. Appearing at a joint press conference with Villepin, Ivanov said that the initiative envisages regular meetings between the defense and foreign ministers of the two countries, the first of which is scheduled to take place in Paris this fall. Both ministers also stressed their common positions on the Middle East and on the need for a "political solution" regarding Iraq. Villepin also met the same day with President Putin to discuss the upcoming Franco-Russian summit to be held on 19-20 July in Sochi.

...BUT FAIL TO MAKE PROGRESS ON KALININGRAD...
De Villepin and Ivanov also discussed the problems surrounding Kaliningrad but failed to reach any breakthrough, the BBC and other news agencies reported on 8 July. Ivanov continued to stress Russia's demand for visa-free access to Kaliningrad and to complain that the European Union has rejected all of Moscow's proposals. De Villepin gave no indication that the EU is prepared to make any concessions. However, he said that, "little time remains to resolve the problem and France will do its best to find a practical solution."

...AS FOREIGN MINISTER TALKS TOUGH ON KALININGRAD.
Speaking on ORT on 7 July, Foreign Minister Ivanov said that, "if anybody in the West has the idea of tearing Kaliningrad from Russia, he will fail." Russia's leadership will never leave oblast residents without support, he continued. Ivanov also said that the European Union position on Kaliningrad "is very weak." The EU argues that the organization's borders must be secure after Poland and Lithuania join in order to prevent Kaliningrad from serving as a conduit for organized crime, drugs, and AIDS. However, Ivanov argued, Russia is also threatened by these dangers and is equally interested in combating them.

MILITARY PREPARES FOREIGN PASSES FOR ITS UNITS.
Meanwhile, Captain Anatolii Lobskii, head of the press service of the Kaliningrad-based Baltic Fleet, said that navy command has begun preparations for issuing foreign passes to service personnel stationed in the region, strana.ru reported on 5 July. Lobskii noted that the documents must be ready by 1 January 2003, the date on which Lithuania plans to introduce visa requirements for Russian citizens.

RUSSIA THWARTS DISCUSSION OF GEORGIAN ISSUES AT OSCE.
On the third day of the 11th annual session of the OSCE's Parliamentary Assembly in Berlin, the head of the Russian delegation, State Duma Chairman Gennadii Seleznev, managed to cut short discussion of the distribution of Russian passports to citizens of the unrecognized breakaway Georgian republics of Abkhazia and South Ossetia, gazeta.ru reported on July 8. The electronic publication claims that the distribution of passports through unofficial channels has been taking place with Moscow's tacit consent, and the protests of the Georgian government have been ignored. After arriving at the OSCE session, the Georgian delegation demanded that this issue be raised. According to gazeta.ru, Georgian parliament speaker Nino Burdjanadze called such actions by Russia an attempt to annex part of its territory under the guise of protecting Russian citizens (see also "RFE/RL Caucasus Report," 20 June 2002). However, Seleznev called Burdjanadze's words "a severe insult to Russia" and used Russia's right of veto to end the discussion, gazeta.ru reported.

FEDERATION COUNCIL LEADERS DISCUSS JACKSON-VANIK AMENDMENT WITH U.S. DELEGATION.
Federation Council speaker Sergei Mironov and Federation Council Foreign Affairs Committee Chairman Mikhail Margelov said they hope that the United States will lift the Jackson-Vanik amendment this year, ORT and other Russian news agencies reported. The leaders made the comments following a meeting in Moscow on 2 July with a U.S. Senate delegation headed by Senate Republican Leader Trent Lott. While some expressed hope that the amendment will be repealed before U.S. Congressional elections in November, ITAR-TASS quoted Margelov as saying that, "we must be realists in this matter, and the Russian side hopes the amendment will be repealed before the end of this year." Margelov noted that members of the Federation Council and the U.S. Senate will meet in September to discuss repealing the amendment, according to ITAR-TASS.

NATIONAL SECURITY

PUTIN CALLS FOR NEW ECONOMIC-SECURITY POLICY...
Speaking at a Security Council meeting on 8 July, President Putin called on the government to develop a new economic-security policy, RIA-Novosti and RTR reported the same day. Putin noted that the national and international situations have changed considerably since the current policy was adopted in 1996. He said that current threats to the country's economic security include the demographic situation, illegal immigration, and border and customs issues. Putin noted that there are also important issues in the energy and transportation sectors and that the government must consider the impact of exposure to global markets that will come with Russia's accession to the World Trade Organization. He concluded that the Security Council must therefore establish new economic-security priorities. Speaking after Putin, Economic Development and Trade Minister German Gref told the council that in order to provide a minimal level of national economic security, the country's gross domestic product must be at least 40 to 50 percent higher than at present, "Vedomosti" reported on 8 July. Therefore, Gref said, Russia needs annual economic growth of 4-5 percent for the next eight years.

...AS EXPERT CONSIDERS POVERTY THE MAIN SECURITY THREAT.
Economist and Academician Viktor Ivanter, who is also a member of a governmental committee on economic security, said that the main threat to Russia's economic security is poverty and the inherent threat of social conflict, strana.ru reported on 8 July. The country is also threatened by its dependence on food imports and the increasing obsolescence of the technological base, which might eventually lead to the loss of the country's political independence.

KOLA CLEANUP TO PROCEED.
International donors pledged $1.78 billion on 9 July to help clean up nuclear waste and other environmental hazards in and around northern Russia, Reuters reported the same day. At a joint Russia-EU conference in Brussels, the European Commission pledged $50 million, while Russia, Denmark, Finland, the Netherlands, Norway, and Sweden pledged $10 million each to provide initial funding for the most urgent projects in the Baltic Sea and Barents Sea regions. In addition, more than a dozen other cleanup projects have been developed, which will be funded by loans from the European Bank for Reconstruction and Development and other institutions. About $500 million will be dedicated to cleaning up nuclear waste on the Kola Peninsula. "We must make sure that what is a hazard today does not become a disaster tomorrow," said EU External Relations Commissioner Chris Patten.

POLITICAL ECONOMY

MOSCOW TO EXTEND NUCLEAR COOPERATION IN ASIA.
Speaking in Beijing on 8 July, Atomic Energy Minister Aleksandr Rumyantsev said that Russia will increase its transfer of nuclear-energy technologies to China, India, Iran, and other Asian states, ITAR-TASS reported the same day. Addressing the Russian-Chinese Commission on Nuclear Cooperation, Rumyantsev noted that his agency will take part in the bidding to build two additional reactors for the Tianwan nuclear-power plant on China's eastern coast, where his ministry has already installed two reactors. Russia is also constructing two blocks at India's Kudamkulan plant and plans to complete the nuclear-power plant in Bushehr, Iran, in 2004-05.

KREMLIN PLANS TO TAKE CONTROL OF VITAL NATURAL RESOURCES FROM REGIONS.
Dmitrii Kozak, deputy chief of the presidential administration, is ready to introduce a bill that would transfer control over the most valuable natural resources -- including oil, natural gas, gold, diamonds, and ferrous and nonferrous ores -- to the federal government and declare them federal property, "Ekspert," No. 24, reported. This new bill would amend the existing law on mineral wealth and the Tax Code and will leave the regions control only over relatively insignificant resources such as gravel, sand, and underground water, the weekly noted (see "RFE/RL Newsline," 20 June 2002), noted the weekly. Under the amendments, revenues from the exploitation of natural resources would go to the Kremlin, which will then distribute them among the regions. The government expects strong opposition from the Yamalo-Nenets Autonomous Okrug, Khanty-Mansii Autonomous Okrug, Krasnoyarsk Krai, and the republics of Komi, Sakha (Yakutia), Tatarstan, and Bashkortostan, which are rich in natural resources. However, the Kremlin believes its majority in the Duma is strong enough to overcome this resistance.

PRIME MINISTER, MOSCOW MAYOR LOBBY FOR WORLD EXPO.
Prime Minister Mikhail Kasyanov, Moscow Major Yurii Luzhkov, and Nobel Prize in Physics laureate Zhores Alferov arrived in Paris on 1 July to lobby for Moscow's bid to host the 2010 World Expo, "Vremya novostei" and "Vedomosti" reported. Kasyanov and Luzhkov are to present Russia's estimated $2.2 billion bid at a session of the assembly of the International Exhibition Bureau.

STRONG EURO INCREASES RUSSIAN INDEBTEDNESS.
Izvestia.ru reported on 3 July that Moscow currency-exchange outlets were selling euros on 2 July for 31.51 to the ruble, while the U.S. dollar was being sold for 31.01 to the ruble. The website stressed that, although demand for the euro in Russia is currently not very high, demand will obviously increase if the euro sustains its strength against the dollar. Meanwhile, presidential economic adviser Andrei Illarionov said on 3 July that every increase of the euro's strength by 1 cent against the dollar increases Russia's foreign debt by $100 million. This is because most Russian debt is denominated in dollars but owed to European countries.

GAZPROM BUYS OUT GUSINSKII.
Natural-gas giant Gazprom announced on 9 July that it has acquired all the shares in its media holdings that formerly belonged to magnate Vladimir Gusinskii, Russian and Western news agencies reported. The company, which is 38 percent state-owned, refused to release details of the purchase, but said that the deal was intended to make the properties more attractive to outside investors. Gazprom maintains that will divest itself of its media holdings by the end of the year.

MILITARY

PUTIN ABOLISHES 300-YEAR-OLD MILITARY DECREE.
President Putin issued a decree on 30 June annulling a widely used form of military discipline that was introduced by Peter the Great in 1702, RBK reported on 4 July. In accordance with the tsarist-era statute, any commanding officer had the right to punish a soldier with up to 10 days in prison for violating a military order. In his decree, Putin said that all military statutes must be brought into line with the Russian Criminal Procedure Code, which means that no soldier can be imprisoned except by decision of a military court.

LAW ENFORCEMENT

FIRST ELEMENT OF PUTIN'S LEGAL REFORMS COMES INTO EFFECT.
The new Criminal Procedure Code officially came into force on 1 July as part of a major judicial reform promoted by the Kremlin. The code aims to enhance the rights of suspects by requiring a court warrant for searches and arrests, and by banning the return of cases for additional investigation, a practice that often resulted in long, illegal imprisonments. In addition, the code stipulates that the first interrogation of a suspect be held within 24 hours of detention, and that the suspect has the right to a two-hour consultation with an attorney prior to it. The new code also attempts to give more power to defense attorneys by allowing them to conduct independent investigations of the case, RosBalt news agency reported. However, critics charge that the law does little to prevent human-rights abuses and will be difficult to implement. "It all looks very democratic if one doesn't know how it looks from the inside," "The Moscow Times" of 1 July quoted Council of Independent Legal Experts head Mara Polyakova as saying.

NEW CRIMINAL PROCEDURE CODE SPARKS CONTROVERSY.
The new Criminal Procedure Code has already aroused controversy over its content and the mechanism for its implementation. The case of Colonel Yurii Budanov, who is charged with murdering an 18-year-old Chechen woman in March 2000, received much attention this week when a military judge failed to deliver a verdict and ordered a further psychiatric examination in the case. The practice of returning to earlier stages of the legal process is permitted under the new code, which "Vremya MN" on 2 July suggested that the prosecutor purposefully "used the new code to serve his own interests" in order to delay the Budanov case. The daily also commented that the new law, which requires a court warrant in order to arrest suspects during the preliminary stage of investigations, is creating technical difficulties for law-enforcement bodies. The daily noted that no such warrants were issued by courts in Moscow on 1 July, a city that averages roughly 50 such warrants a day.

CRIME AND PUNISHMENT

SIBUR HEADS GO TO TRIAL AS CREDITORS CIRCLE.
The Prosecutor-General's Office announced that it has completed its investigation of the heads of Gazprom's subsidiary Sibur and handed the case over to a court, strana.ru reported on 2 July (see "RFE/RL Newsline," 22 and 29 January, and 1, 8, and 12 February 2002). Yakov Goldovskii and Yevgenii Koshits are accused of embezzlement, fraud, money laundering, and abuse of office. Meanwhile, a meeting of Sibur creditors on 1 July decided to petition an arbitration court in the Yamalo-Nenets Autonomous Okrug where Sibur is registered to declare the company bankrupt, strana.ru reported.

PUTIN ASKED TO HELP IN INVESTIGATION OF FORMER FINANCE MINISTER.
Fedor Sobolev, the investigator from the Interior Ministry that looked into the case of former Finance Minister Andrei Vavilov (see "RFE/RL Newsline," 22 January, 22 and 29 May, and 14, 17, 27, and 28 June 2002) has appealed to President Putin to intervene in the case because of obstruction of justice, RIA-Novosti and gzt.ru reported on 2 July. In particular, Sobolev complained that during the investigation he came under strong pressure to suspend the case from his superior within the Prosecutor-General's Office. He also revealed that he was beaten near his home by unknown assailants, and was telephoned the next day by Vavilov's lawyer, a Ms. Kopytseva, who asked "whether he still has the desire to interrogate Vavilov" and threatened him with "further consequences." After the threat, Sobolev sent subpoenas to Vavilov, which he ignored. In his appeal to Putin, Sobolev said he was subsequently summoned to the Prosecutor-General's Office on 25 June, where he was informed that he was suspended from the investigation.

SCANDAL OVER SLAVNEFT CONTINUES.
Mikhail Gutseriev, the head of the Russian-Belarusian state-run company Slavneft, has said he continues to consider himself the head of the company, though he was replaced in May by Yurii Sukhanov, Russian news agencies reported on 1 July (see "RFE/RL Newsline," 13 and 20 May 2002). Gutseriev also said that Sukhanov, who is currently being investigated for embezzlement, "voluntarily resigned." Gutseriev said he is ignoring the decision made by Slavneft shareholders on 28 June not to elect him board director as irrelevant, as the company's statutes do not require the company president to be on the board of directors. Meanwhile, Sukhanov told reporters that Gutseriev ordered guards not to admit him to company headquarters. Sukhanov also said he has asked the Russian government to intervene in the situation surrounding the state company.

MOSCOW COURT HEARS INDICTMENT IN AEROFLOT CASE.
The Savelovskii Municipal Court in Moscow on 8 July began hearing the prosecution's indictment against former top managers of the national air carrier Aeroflot, former Deputy General Director Nikolai Glushkov and former Deputy General Director Aleksandr Krasnenker, Russian news agencies reported the same day. The pair are charged with laundering more than $250 million of company funds through the Switzerland-based front companies Andava and Forus, which are reportedly controlled by magnate Boris Berezovskii. The indictment alleges that the accused laundered more than 80 percent of Aeroflot's annual hard-currency revenues and that they deceived the company's former general director, Marshal Yevgenii Shaposhnikov. Meanwhile, "Le Monde" on 8 July published an investigative report about the involvement of Forus in the dubious acquisition of luxury properties on the French Riviera. According to "Le Monde," French law-enforcement agencies detected suspicious transactions from Forus to middleman companies involving the property deals, and the prosecutor of Marseilles has opened a criminal investigation into possible money laundering.

SECRET SERVICES

KGB VETERAN SAYS KALUGIN DIDN'T HELP THE U.S....
A veteran of the KGB's foreign-intelligence service, Colonel Leonid Kolosov, said that former KGB General Oleg Kalugin -- who was sentenced in absentia on 26 June to 15 years in prison for treason (see "RFE/RL Newsline," 26 June 2002) -- could not have revealed the identities of undercover agents to U.S. intelligence, "Ekspress-gazeta" reported on 4 July. Kolosov said that most of agents that work under deep cover only work for about 10 years and those who worked under ordinary diplomatic cover have already retired. Therefore, he and Kalugin have no knowledge of the current generation of spies. Kolosov also said that now that Russia and the United States are cooperating closely to share information about common threats, Russian counterintelligence should be most wary of Eastern and Middle Eastern secret services, apparently referring to China and Israel.

...AS INTELLIGENCE EXPERT CLAIMS RECORD NUMBER OF RUSSIAN SPIES DEFECTED TO U.S.
Writing in "Moskovskii komsomolets " on 4 June, intelligence expert Aleksandr Khinshtein said that more than two dozen Russian intelligence officers and diplomats defected to the United States during the 1990s, including several senior officials with the Foreign Intelligence Service's counterintelligence department. Among the defectors, Khinshtein also mentioned several senior Foreign Ministry officials, including Vladislav Potapov, an aide to the Foreign Ministry, who had information about Russian intelligence officers working under diplomatic cover around the world.

ANOTHER RUSSIAN SCIENTIST ACCUSED OF ESPIONAGE.
The Primorskii Krai court in Vladivostok began closed-door hearings on 3 July of the case of Vladimir Shchurov, the head of the scientific laboratory at the Pacific Ocean Oceanological Institute, who is accused of state treason, Russian news agencies reported. Shchurov was arrested by the local directorate of the Federal Security Service (FSB) in October and indicted for attempting to smuggle allegedly top-secret equipment into China. However, Shchurov claims he has dealt only with purely scientific research his whole career, and has never been exposed to state secrets.

YET ANOTHER CHEKIST GENERAL JOINS RANKS OF INTERIOR MINISTRY.
President Putin signed a decree on 30 June to appoint Major General Rashid NurgAliyev to head the Interior Ministry's Criminal Police Service, Russian news agencies reported. Like his predecessor, Nikolai Bobrovskii, NurgAliyev is a cadre officer of the Federal Security Service (FSB) and until recently headed the service's Directorate for Combating Drug Trafficking and Contraband. With another decree the same day, Putin transferred his long-standing associate Bobrovskii to another, unspecified job.